Economic Carnage and what it entails for Rangers

[Gonzo79 13,579]

5 minutes ago, compo said:

If it was up to me there wouldn't be a single minute of football played in this country as long as there is a single  case of this virus

See you in 2030 then.  ?

[Gaffer 1,665]

1 hour ago, buster. said:

Interesting and a somewhat scary post, Gaffer !

You point to delayed effects (12-18 months) but for football, what state are Scottish football clubs in 8 months, if there is little revenue ? And specifically, us ?

 

I guess one of the main difficulties for economists interested in an objective assessment is that there is no historical  precedent to use for comparison or model on. It´s increasingly looking like new and genuinely scary territory.

 

 

Funnily enough we have plenty of precedents, albeit the cause (in this case a 'disease) is different.  It is scary and what bothers me is that the government continue to insist that they're listening to their medical advisers.  That's crazy.  They can only give one side of the issue to the government but history tells us that far more deaths occur in depressions and in poorer economies than this disease can ever cause.  I could give you those numbers but they are very frightening so I'll refrain from that on here.

 

One additional thing w are beginning to see also is a sharp decline in the value of certain stocks.  This lockdown has shown how vulnerable certain businesses are and as a result their intrinsic value will be lowered to reflect that.  This means that pension funds and other investments will be widely affected too.  The long term effects of this lockdown are way greater than the threat of the disease.

 

Rangers must tap into its supporters better.  I don't know how much room there is to manoeuvre on Rangers TV so that we can show all away domestic games on that platform.  We need to look at all avenues of income.

[der Berliner 3,231]

Thing is, I would assume we have a "war chest" set aside for SG to improve the squad. When we  did that and if is anyone's guess. Might well be that quite a bit of that war chest, if existing, has been spend on C19 demands and requirements of the club.

 

In effect, we'll never know up until a signing happens by or the interim / annual reports are made.

 

As of Corona, IMHO it is stil a case of month to month, as one hardly has a clue how fast a vaccine or antidote can be found or produced. If found, I reckon half the pharma industry on the planet will be at it and Corona will go down to Influenza levels. Whether that will happen in May or next January is anyone's guess and I won't cry wolf about pure conjecture - one way or another.

[Bluedell 5,329]

1 hour ago, buster. said:

Given my location, I haven´t been to Ibrox for a while but would you or anyone say the demographics within our support point to a fair proportion of retired gentlemen attending ? Surely they will be considering the risks involved with anything other than social distancing until a real solution is found.

 

That said, I guess OAP tickets/ST´s represent a lower revenue number/potential loss.

There may be a government guideline which insists on social distancing.

[Bluedell 5,329]

23 hours ago, der Berliner said:

Thing is, I would assume we have a "war chest" set aside for SG to improve the squad. When we  did that and if is anyone's guess. Might well be that quite a bit of that war chest, if existing, has been spend on C19 demands and requirements of the club.

There's no war chest. The directors had to guarantee that they would put in £10m during the season just to keep us going.

 

On 21/04/2020 at 10:09, Gaffer said:

 I don't know how much room there is to manoeuvre on Rangers TV so that we can show all away domestic games on that platform.  

There's none domestically. We don't have any rights to show games in the UK.

[Bill 13,717]

I can't understand why Rangers isn't already locking away the chequebook and taking every step possible to minimise cash outflow. More companies go to the wall in challenging times due to hesitation than the challenge itself. 

 

It's for situations like this that companies carry a cash reserve. Rangers, as far as I can see, has no reserve, other than soft loan commitments. Such commitments can no longer be guaranteed because every director whose wealth is founded on his business will also be under pressure. With no end in sight to current restrictions, what Rangers is effectively doing at the moment is bleeding cash. The danger is that, by the time it becomes clear how long it will be before income streams are flowing again, Rangers may be in existential difficulties.

 

I have no insight into Rangers' operating finances but, if it were me, I'd be assuming no crowds (ST income) before (say) October and ruthlessly minimising outgoings between now and then, regardless of the emotional stuff about laying off staff. Any other strategy is irresponsible. I spent my business life in the oil industry, where there is a constant cycle of boom of bust and if you didn't make provisions for and react early to hard times, you likely went to the wall. Rangers don't normally operate in an environment like this and it worries me we may not have the required survival instincts.

 

Far too much attention is being given to the SPFL and awarding titles. Of much greater concern to me is the condition Rangers could be in six months from now.

Edited April 21, 2020 by Bill

[Gaffer 1,665]

1 hour ago, Bill said:

I can't understand why Rangers isn't already locking away the chequebook and taking every step possible to minimise cash outflow. More companies go to the wall in challenging times due to hesitation than the challenge itself. 

 

It's for situations like this that companies carry a cash reserve. Rangers, as far as I can see, has no reserve, other than soft loan commitments. Such commitments can no longer be guaranteed because every director whose wealth is founded on his business will also be under pressure. With no end in sight to current restrictions, what Rangers is effectively doing at the moment is bleeding cash. The danger is that, by the time it becomes clear how long it will be before income streams are flowing again, Rangers may be in existential difficulties.

 

I have no insight into Rangers' operating finances but, if it were me, I'd be assuming no crowds (ST income) before (say) October and ruthlessly minimising outgoings between now and then, regardless of the emotional stuff about laying off staff. Any other strategy is irresponsible. I spent my business life in the oil industry, where there is a constant cycle of boom of bust and if you didn't make provisions for and react early to hard times, you likely went to the wall. Rangers don't normally operate in an environment like this and it worries me we may not have the required survival instincts.

 

Far too much attention is being given to the SPFL and awarding titles. Of much greater concern to me is the condition Rangers could be in six months from now.

^^^This 100%.  I've said it a few times.  This is about surviving now.  The sooner businesses realise this, the better chance they have of getting through it.  I doubt that many of the current football clubs will still exist in 5 years.  The most at risk are those larger clubs, especially in England, Italy, Spain and France.

[MacK1950 2,229]

10 minutes ago, Gaffer said:

 The most at risk are those larger clubs, especially in England, Italy, Spain and France

Have said many times a domino effect could come in with collapse of a major club,but didn't think a virus would be the chance of the cause.

[Scott7 5,119]

3 hours ago, Gonzo79 said:

See you in 2030 then.  ?

I should be so lucky.

[Tannochsidebear 2,306]

Let's be quite open about this, there is not a remote chance of a 50,000 strong Ibrox crowd watching a Rangers match this calendar year. Until such time as a vaccine can be found, mass-produced, distributed and found to be working, can we take the chance as a country of allowing such mass congregation of spectators to watch a sporting event. The best estimate of this happening is 12-18 months. So there might be football back on tv before then, but not with full house crowds.

 

So as a football club, and a business, that gets most of its annual income from such crowds, then the sooner we cut our costs accordingly, the better the chance we have of survival. There is not one player, coach, manager or administrator that is worth  our club going bust for. Our non-staff overheads are also enormous at our club, for ongoing maintenance, insurances, etc, and with nothing coming in, these have to be managed. 

 

I have yet to hear that by furloughing a player, that gives them any wriggle room in their contract to leave for free. Obviously if it turns out that this would allow the player to leave for free (i.e. breach of contract), then this wouldn't work, but as far as I am concerned, we should be putting every single non-playing, non-income generating, member of staff on furlough and not topping up their wages, or if we can afford to , top them up to a reasonable level that would allow them to live. As for players, slash all wages until such times as they can undertake their work again. A lot of our players aren't even in the country, but we are continuing to pay them in full (dont give me any tosh about deferrals, that merely adds a debt to be repaid down the line), despite them not being able to go to work or to earn their wages. Furlough them all, take the longer term view and safeguard our future.

 

If it turns out that somehow a vaccine is found sooner, and we dont have this gap in our income for as long as I am predicting, then we an make it up to them and repay the wages they have lost, or at least some of them. But the safety and long-term future of the club has to be our Director's first and only concern at this time. Players will come and players will go, the club has to be kept safe to ensure it is still there for us to enjoy in the decades to come.